from the if-we-just-call-it-net-neutrality,-maybe-no-one-will-notice dept

In 2014, it really looked like Europe was moving towards strong net neutrality, while the US was going to allow for special fast lanes on the internet. In 2015... everything has gone the other way. The US passed real net neutrality rules, while Europe has not only decided to kill net neutrality, but has done so in a way where they pretend that they're actually supporting net neutrality.

In some way, this isn't a surprise. EU Digital Commissioner Gunther Oettinger recently mocked net neutrality and its supporters, saying they had turned it into a "Taliban-like" issue. Then a month ago, rumors started to fly that the weekly "trialogue" meetings between the EU Commission, the Council of the EU and the EU Parliament was looking to ditch net neutrality altogether. Instead, it appears that the final solution was actually to redefine net neutrality to pretend they were offering it, while really killing it. And, as a consolation prize, they're killing off roaming charges around Europe (which can be pretty extreme). But that is little consolation for the fact that they're actually destroying net neutrality in the process.

The little trick being pulled by politicians who apparently think the public is too stupid to understand this is to redefine net neutrality. First, they claim that the "open internet" is really important and they won't allow paid prioritization. This part all sounds good:

The rules enshrine the principle of net neutrality into EU law: no blocking or throttling of online content, applications and services. It means that there will be truly common EU-wide Internet rules, contributing to a single market and reversing current fragmentation.

Every European must be able to have access to the open Internet and all content and service providers must be able to provide their services via a high-quality open Internet.

All traffic will be treated equally. This means, for example, that there can be no paid prioritisation of traffic in the Internet access service. At the same time, equal treatment allows reasonable day-to-day traffic management according to justified technical requirements, and which must be independent of the origin or destination of the traffic.

Sounds good, right? But there's a pretty big catch. Those rules and the "open internet" don't cover what most people think of as the internet. Instead, it's been boxed in. Because the deal also creates a made up new categorization known as "specialized services" where such prioritization will be allowed.

What are specialised services (innovative services or services other than Internet access services)?

The new EU net neutrality rules guarantee the open Internet and enable the provision of specialised or innovative services on condition that they do not harm the open Internet access. These are services like IPTV, high-definition videoconferencing or healthcare services like telesurgery. They use the Internet protocol and the same access network but require a significant improvement in quality or the possibility to guarantee some technical requirements to their end-users that cannot be ensured in the best-effort open Internet. The possibility to provide innovative services with enhanced quality of service is crucial for European start-ups and will boost online innovation in Europe. However, such services must not be a sold as substitute for the open Internet access, they come on top of it.

Got it? The "regular" internet has no fast lanes. But... right over here, we have the "specialized services" part of the internet which, you know, kinda looks like a fast lane. Because it is. So, now, basically, in Europe you can buy your way into the fast lane by claiming your services are "specialized" and watching as the regular internet pokes along at slower speeds.

The agreement does a lot of handwaving to pretend this doesn't destroy net neutrality, but the more handwaving they do, the more obvious it is that the politicians here know exactly what they're doing:

By allowing the provision of innovative services, are we not promoting a two-tier Internet?

No. Every European must be able to have access to the open Internet and all content and service providers will be able to provide their services via a high-quality open Internet. But more and more innovative services require a certain transmission quality in order to work properly, such as telemedicine or automated driving. These and other services that can emerge in the future can be developed as long as they do not harm the availability and the quality of the open Internet.

Therefore it is important to have future proof rules which, while fully safeguarding the open Internet, allow market operators to provide services with specific quality requirements in order to provide them in safe manner. It is not a question of fast lanes and slow lanes - as paid prioritisation is not allowed, but of making sure that all needs are served, that all opportunities can be seized and that no one is forced to pay for a service that is not needed.

Oh, and of course, the new rules allow zero rating, which is the sneaky trick by which telcos use data caps to backdoor in preferential treatment to those willing to pay, while pretending this is some sort of benefit to consumers. The EU sees no problem with this, despite the fact that it enables large internet companies to squeeze out startups and smaller players.

What is zero rating?

Zero rating, also called sponsored connectivity, is a commercial practice used by some providers of Internet access, especially mobile operators, not to count the data volume of particular applications or services against the user's limited monthly data volume.

Zero rating does not block competing content and can promote a wider variety of offers for price-sensitive users, give them interesting deals, and encourage them to use digital services. But we have to make sure that commercial practices benefit users and do not in practice lead to situations where end-users' choice is significantly reduced. Regulatory authorities will therefore have to monitor and ensure compliance with the rules.

Of course, Digital Commissioner Oettinger inadvertently appeared to confirm that this is the end of net neutrality with his poorly worded tweet on the subject, in which he notes that this is "the end of roaming and net neutrality."

Obviously, he only meant "the end of" to apply to roaming, but having it cover net neutrality as well would be a lot more accurate. Either way, while Oettinger once compared it to a Taliban-like issue, his response has been more on the Orwellian side of things. So long as they redefine the words, the government hopes no one will notice what they actually did. It's the public officials' way of thinking that they're clever and that the public is stupid. That seems like an unwise assumption.

from the you're-really-not-helping dept

Nobody could ever accuse FCC Commissioner Mike O'Rielly of being a consumer advocate. As one of five agency commissioners, O'Rielly (alongside former Verizon lawyer Ajit Pai) has voted down every single meaningful FCC effort to aid consumers and improve broadband market competition. Whether it's trying to protect net neutrality, or the FCC's attempt to stop ISPs from writing obnoxious protectionist state law, O'Rielly's sole function appears to be to oppose pretty much everything that could possibly help the American public, under the ingenious pretense of helping the American public.

More recently, the FCC has been considering revamping the $1.7 billion Lifeline program, which was created by the Reagan administration in 1985 and expanded by Bush in 2005 to help bring phone services to low-income Americans. Despite being a Republican proposal, it's frequently mocked (even by reporters) as being part of the "Obamaphone" program thanks to the nation's ongoing case of partisan nitwit disease. The FCC's initiative involves letting the program's 1.2 million participants use some of the whopping $9.25 monthly discount (per household) they receive each month on broadband instead of just voice. Really, it's not all that controversial, especially in the context of bigger budget government issues.

Yet while the contextually-more immense subject of military and intelligence funding is apparently immune to this type of criticism, the very notion of using taxpayer funds to aid the less fortunate fostered the usual amount of hand-wringing and assorted hysteria. Not all of it was without justification given the FCC's utterly shitty history of policing USF fraud. But after a fifteen year nap, more consumer-minded FCC boss Tom Wheeler has been cracking down on fraud, even if some of the fines being levied are relatively pathetic. Still, a big part of this new proposal involves cracking down on fraud further.

But even if you oppose subsidies to the poor (which I don't agree with but can understand), one still needs to answer the question of how we improve broadband competition, penetration, and deployment to the estimated 55 million Americans without broadband and the countless others stuck in uncompetitive markets. To illustrate the importance of this conversation, Wheeler several times has tried to argue that we're reaching the point where broadband needs to be thought of as a basic human right. This isn't that new or controversial either, really. Finland declared broadband a human right five years ago (and you'll note they lead many broadband performance metrics). The UN declared broadband a human right in 2011.

"It is important to note that Internet access is not a necessity in the day-to-day lives of Americans and doesn’t even come close to the threshold to be considered a basic human right," he said. "People can and do live without Internet access, and many lead very successful lives."

And while that's not necessarily wrong (broadband provides no phytonutrients or Omega-3 fatty acids, after all), broadband is increasingly a vital tool to connect people to health care, employment data, government services and everything else under the sun, making it pretty god-damned important. Whether broadband should be thought of as a necessity, utility and luxury has always caused endless, idiotic hyperbolic debate in the telecom sector. Why? Because if you consider broadband essential, you then have to then reconcile the fact that we've done a horrible job at trying to expand and improve it, whether that's through incentives, public/private partnership or policies that encourage competition (all of which O'Rielly opposes).

So, as somebody that just wants the miraculous U.S. broadband free market to remain as is (expensive, slow, generally kind of shitty) to help shore up some inflexible and unrealistic political beliefs, O'Rielly's quick to declare the idea of broadband as a human right "demeaning":

"It is even more ludicrous to compare Internet access to a basic human right," said O'Rielly. "In fact, it is quite demeaning to do so in my opinion. Human rights are standards of behavior that are inherent in every human being. They are the core principles underpinning human interaction in society. These include liberty, due process or justice, and freedom of religious beliefs. I find little sympathy with efforts to try to equate Internet access with these higher, fundamental concepts."

And that's great and all, but O'Rielly's not sitting on the Supreme Court or teaching a Constitutional ethics class. He's employed by an agency that has, as one of its Congressionally-mandated goals, the responsibility to "encourage the deployment on a reasonable and timely basis of advanced telecommunications capability to all Americans." That's something we've failed at by any measure (unless you're blinded by politics, employed by an ISP or paid by an ISP to look the other way). And again, if you're going to oppose subsidy programs like Lifeline, you at least need to support or recommend policies that can help drive more competition and services to areas with a low rate of return on the ISPs' investment.

Except O'Rielly's done none of that. What he's done is sit on his hands, opposing essentially every attempt to shore up broadband connectivity that shows up on the docket. He's voted against raising the definition of broadband to 25 Mbps. He's voted against stopping giant ISPs from writing state laws that protect regional duopolies. He's even voted against fining AT&T for blatantly lying to its customers. O'Rielly's MO is to shut down every proposal that comes down the pike (including many that can help consumers), then proudly pat himself on the back for being a hero of the American public. That suggests he's probably the very last person we should be asking when it comes to determining what technology is or isn't absolutely necessary.

from the network-shenanigans dept

While filing a net neutrality complaint is now easier than ever, actually identifying violations may not be. In the new age of interconnection, usage caps, overages, and pay-to-play zero rating deals, less technical users simply may not understand when they're being screwed by their ISP, as these violations aren't nearly as ham-fistedly obvious as outright blocking or throttling of services. That's why the Open Technology Institute’s MLAB recently introduced the Internet health test, which runs user connections through a bevy of speed and performance tests to determine whether or not ISPs are engaged in any shenanigans.

Last October, MLAB released a study (pdf) that strongly supported Netflix, Level3 and Cogent's claims that ISPs were intentionally letting peering points to transit operators saturate to try and force companies like Netflix to begin paying for direct interconnection. In short, neutrality advocates believe ISPs had moved net neutrality to the edge of the network, using interconnection to grab the pound of flesh from content companies they've long stated was their end goal.

The problem is both sides of the equation (whether that's Netflix or AT&T) keep most of their data on interconnection (and the deals they strike) private for competitive reasons, meaning that while signs (and thirty years of history) pointed to ISP skulduggery, actually proving it is difficult. It's apparently becoming less difficult with the new consumer connection data being collected by MLAB, which the Guardian this week claimed proves big ISPs are intentionally degrading network performance across some networks:

"The study, conducted by internet activists BattlefortheNet, looked at the results from 300,000 internet users and found significant degradations on the networks of the five largest internet service providers (ISPs), representing 75% of all wireline households across the US...In Atlanta, for example, Comcast provided hourly median download speeds over a CDN called GTT of 21.4 megabits per second at 7pm throughout the month of May. AT&T provided speeds over the same network of ⅕ of a megabit per second. When a network sends more than twice the traffic it receives, that network is required by AT&T to pay for the privilege."

This is, consumer advocate group Free Press claims, proof positive that ISPs are up to no good:

"For too long, internet access providers and their lobbyists have characterized net neutrality protections as a solution in search of a problem,” said Karr. “Data compiled using the Internet Health Test show us otherwise – that there is widespread and systemic abuse across the network. The irony is that this trove of evidence is becoming public just as many in Congress are trying to strip away the open internet protections that would prevent such bad behavior."

The problem? While the Guardian report references a "new study," no study has actually been released that I could find (MLAB apparently just shared some selective data with The Guardian). That brings us back to the fact that the biggest problem here continues to be a lack of transparency on the part of all the players involved. But it's pretty hard to claim a "study" proves much of anything when there's no actual study, suggesting some over-eagerness on the parts of consumer advocates here.

Shortly after the Guardian piece MLABS did post a blog entry that sheds a little more light on the data they're collecting, but it's worth noting that while MLAB engineers are confident in saying these slowdowns are due to business choices and not network capacity, they're not yet willing to definitively state why some transit routes suffer more than others:

"It is important to note that while we are able to observe and record these episodes of performance degradation, nothing in the data allows us to draw conclusions about who is responsible for the performance degradation. We leave determining the underlying cause of the degradation to others, and focus solely on the data, which tells us about consumer conditions irrespective of cause."

Still, despite some of the breathless rhetoric in the Guardian piece neutrality advocates still haven't obtained the AT&T lawyer proof silver bullet that indisputably proves large ISPs have been up to no good. I'm not entirely sure this can even be accomplished without access to raw, confidential ISP data and internal correspondence that may or may not even exist (how do you "prove" Verizon intentionally isn't upgrading a port?). Sure, most people can study AT&T and Verizon's behavior over the last thirty years and conclude that yes, this sort of thing would certainly be in their jackassery wheelhouse, but proving it is kind of important if you want these kinds of claims to be taken seriously.

Still, the fact that people are crunching and closely analyzing the data, combined with the new and novel threat of a regulator that's not asleep at the wheel, appears to have many of these companies magically and suddenly getting along famously. This suggests, contrary to broadband industry doomsday prognostications, that the net neutrality rules are having a positive impact on consumers, business interests, and the Internet at large.

from the fine-print dept

Like Silicon Valley, New York City purports to be a bastion for emerging technology, yet, just like Silicon Valley, it suffers from a pitiful lack of broadband options and competition. In New York, Time Warner Cable enjoys notable market dominance, with either spotty Verizon FiOS or DSL coverage providing the barest semblance of real market competition for the cable giant. It wasn't supposed to be this way: in 2008 Verizon struck a closed-door franchise agreement with then NYC Mayor Mike Bloomberg, one which Verizon strongly implied would result in 100% FiOS coverage for all five boroughs of the city by the end of 2014.

The agreement, both Bloomberg and Verizon tried to proclaim at the time, would mean uniform fiber for the whole city, putting an end to the broadband "cherry picking" that plagued franchise agreements of years past:

"Our investment in the City is historic, which is reflected in the citywide nature of our plan," (Verizon's Monica) Azare said. "When our fiber deployment project is completed it will reach to each and every borough, neighborhood, boulevard, avenue and street, without regard to the demographics of a particular area. More importantly, City residents will be able to take advantage of the power of fiber optics delivered straight to their doors."

2014 has of course come and gone, and most estimates peg New York City FiOS penetration at somewhere between 45 and 55%, with most of the city's least affluent areas left in the broadband dark. Despite plenty of warning signs from reporters at the time, and the fact that city lawyers could have read the agreement at any time, New York City officials are only just starting to realize that the deal allowed Verizon ample room to wiggle around and under most of the uniform deployment obligations.

A new city report (pdf) released last week has found, shockingly, that Verizon went right ahead and used these loopholes to cherry pick only select neighborhoods, just as the company had intended. The biggest trick Verizon used to bluff its way past obligations was by bringing fiber somewhere close to many residences (as in buried in the street one block over), then declaring that these users could get fiber. Of course when the city began to look, they found Verizon refused to finish the job:

"As 2014 progressed, and Verizon’s (supposed) build-out approached 100 percent, DoITT began to receive anecdotal evidence, largely in the form of consumer complaints, suggesting that Verizon was simultaneously taking credit for “passing” households and declining to accept orders for nonstandard service installations from those households. The anecdotal evidence, in combination with discussions of the particular households involved with Verizon personnel, led DoITT to be concerned that these anecdotes did not reflect occasional irregularities, but possibly broader failures by Verizon to fulfill the obligations it undertook in the 2008 franchise agreement."

"We indeed have met the requirement to install fiber optics through all five boroughs," a Verizon spokesperson told Ars. "Our $3.5 billion investment and the 15,000 miles of fiber we have built have given New Yorkers added choices and a robust set of advanced, reliable, and resilient services. The challenge we have is gaining access to properties which of course would expand availability. We look forward to working with the City to seek solutions to this issue."

Verizon had been trying to blame crotchety landlords for these expected FiOS coverage gaps for some time, and while there certainly are some difficult building managers, reporters have found in many of these instances that Verizon incompetence was actually to blame. In some instances, Verizon was accused of telling building owners that it would only actually connect buildings to the FiOS network if every resident in the building was required to get service through Verizon and nobody else.

So, the better part of a decade later New York City officials are annoyed at the sweetheart deal their predecessors signed, and insist that they'll be holding Verizon's feet to the fire:

"Through a thorough and comprehensive audit, we have determined that Verizon substantially failed to meet its commitment to the people of New York City,” said Mayor Bill de Blasio..."What the audit reveals is an alarming failure on the part of Verizon to deliver on its franchise agreement with the City,” said Counsel to the Mayor Maya Wiley. “Verizon must make good on its commitment and do so with transparency, accountability and better service delivery going forward. New Yorkers deserve no less."

The agreement says the city "may "seek and/or pursue money damages" if Verizon fails to live up to its side of the agreement, but the loophole-filled wording of the contract will likely make that impossible. If Verizon's business history is any indication, what will actually happen is the company's lawyers will keep the bureaucratic wheels spinning indefinitely, while the city spends another decade paying lip service to the transformative power of broadband. That New York City is at least making a stink about it is at least marginally promising; Pennsylvania and New Jersey officials threw billions of dollars at the company, let it off the hook for any and all obligations, and then just hoped nobody would notice.

from the you-realize-we-have-eyes,-right? dept

As we've been exploring for some time, both AT&T and Verizon have been turning their backs on traditional copper-based phone service and DSL users they're unwilling to upgrade. Both of the companies' next-gen fixed-line broadband deployment plans (U-Verse and FiOS, respectively) have been all but frozen as the ISPs focus on notably more profitable wireless service. The shift is understandable: wireless tends to be cheaper to deploy, less unionized, and relatively less regulated, and the fact that it's usage capped in the face of soaring mobile video growth means future revenue projections are very handsome indeed.

The only problem? Tens of millions of people remain on DSL lines the companies refuse to upgrade to fiber. Many of these lines were built on the backs of billions in taxpayer subsidies -- subsidies that quite often were given for fiber upgrades that were never actually delivered. Both AT&T and Verizon are willfully trying to drive these customers away via the one-two punch of price hikes and support neglect, while going state by state lobbying for the gutting of all regulations requiring that they continue to offer service or meet base levels of service quality.

"The CWA plans to file public information requests this week with a handful of state regulators including in New York, New Jersey and Pennsylvania to see whether it can uncover data showing the extent of the problems..."Verizon is systematically abandoning the legacy network and as a consequence the quality of service for millions of phone customers has plummeted,” said Bob Master, CWA’s political director for the union’s northeastern region."

That specifically shouldn't be hard in both Pennsylvania and New Jersey, where state lawmakers handed Verizon billions in tax breaks and subsidies for symmetrical fiber lines, then more recently voted to let Verizon completely off the hook for failing to meet agreement obligations. Making things worse, states like New Jersey then let Verizon lobbyists sell them on deals that gut the company's remaining obligations to users in these states, meaning what service that remains labors under a completely deregulated environment where there's no punishment for total Verizon apathy.

So with Verizon pretty obviously neglecting its aging copper networks, it's pretty amusing to see a Verizon rep try to tell the Journal that's simply not happening:

"It’s pure nonsense to say we’re abandoning our copper networks," Mr. Young said. Mr. Young said the company is investing in its copper network, and it only offers Voice Link as a temporary replacement while repairs are being done. About 13,000 customers have decided to keep the Voice Link service, Mr. Young said."

Except it's hard to insist a claim is "pure nonsense" when anybody with eyes (or a rural Verizon DSL and phone connection) can see what Verizon's up to. Verizon's been particularly distasteful in its recent decisions to use storm damage (be it Hurricane Sandy or other major storms) to simply refuse to upgrade damaged DSL and POTS (plain old telephone service) lines, instead shoving customers toward the Voice Link service Mr. Young highlights. Except Voice Link is less reliable and provides numerous fewer features than the fixed lines it's replacing, something that has annoyed locals and municipalities.

So while the unions' arguments are obviously self-serving, they're highlighting a pretty important problem that's still managing to fly under the radar despite being a topic of great importance to millions of impacted, neglected consumers. Verizon not only took billions in subsidies and failed to deliver fiber, they're now lobbying states for the right to neglect these remaining copper-based customers they simply couldn't care less about. In short, they've shafted these users from countless directions, in countless ways, for more than a decade. For Verizon to try and claim that these easily-documented problems are "nonsense" is a heaping dose of nonsense in and of itself.

from the network-investment-bogeyman dept

Time and time again over the last ten years of net neutrality debates we've been told that net neutrality rules are an absolute death knell for broadband network investment. We heard it again, repeatedly, ahead of the FCC's February vote to approve the country's first meaningful net neutrality rules. With factory precision, broadband ISPs (and their assortment of paid flacks, lobbyists, lawyers, fauxcademics and other mouthpieces) have breathlessly declared that net neutrality rules would absolutely destroy sector network upgrades, leaving us all crying over our congested, broken broadband connections should rules be passed.

Funny, then, that as the net neutrality rules take effect this week, all evidence continues to point to that claim being absolute and total bullshit.

While their lobbyists and lawyers were busy trying to pretend that net neutrality was the equivalent of investment napalm, executives from Frontier, Cablevision, Sprint, Sonic and even neutrality public enemy number one, Verizon, have been quietly acknowledging the rules won't do anything of the sort. As the rules approach there's no evidence of a slowdown at all; in fact fear of the rules actually has transit and last mile ISPs cooperating more than ever, and there's no indications that the rules have remotely hurt gigabit deployments by the likes of rule opponents like Comcast.

"New U.S. net neutrality regulations have not affected how Charter Communications Inc invests in building its telecoms networks, Chief Executive Tom Rutledge told Federal Communications Commission Chairman Tom Wheeler this week...Rutledge, however, told Wheeler that "the commission’s decision to reclassify broadband Internet access under Title II has not altered Charter’s approach of investing significantly in its network to deliver cutting edge services," according to the disclosure of the June 2 meeting."

Yes, Charter's looking to have a deal approved, but you can obviously see the pattern here. As we've noted all along, there's one reason and one reason alone that broadband ISPs oppose net neutrality rules: it will cost them billions of dollars by limiting the "creative" ways in which they can abuse the lack of last-mile broadband competition. Of course they can't just come out and admit that, so they need to lean on disingenuous arguments like the network investment bogeyman, and cling to them repeatedly even in the face of obvious contradiction by the industry itself.

from the bang-up-job dept

As Comcast pushed tirelessly to try and sell regulators on its doomed acquisition of Time Warner Cable, the company repeatedly stated it was making customer service a top priority, even going so far as to hire a new "customer experience" VP. But what became an almost comical series of horror stories in the media continually showed that simply wasn't the case. If you have a memory, you'll recall that companies like Comcast have been promising to make customer service a priority for the better part of the last decade, yet things somehow manage to actually get worse.

"Only one of 39 Internet providers received a middling score for value, with the remainder failing to reach even that level of mediocrity. TV-service providers also took a beating, with 20 of the 24 companies earning our lowest scores for value; the rest managed to do just a little bit better. Bundles also weren’t deemed especially good deals, since only one of 20 bundled services got an average mark for value—the others all did worse."

Take a moment to let that sink in. In broadband, only one ISP managed to be seen as utterly mediocre in terms of offering a decent value. On the TV front, the vast, vast majority of companies scored as poorly as was technically possible. That's the kind of abysmal performance that can only be perfected after a generation's worth of effort. According to Consumer Reports, these ratings are a seven year low for the broadband and television industry.

On a positive note, the study did find that it still pays to haggle with your cable or broadband provider, assuming you live in a semi-competitive market:

"One other finding from the survey: It pays to negotiate. Among the 42 percent who said they tried to negotiate a better deal, 45 percent reported that the provider dropped the bundle price by up to $50 per month, 30 percent got a new promotional rate, and 26 percent received additional premium channels."

That only 42% of consumers even try to get a better deal is fairly pathetic. But as cord cutting's slow-trickle-statistics suggest, there are tens of millions of customers that hate nearly everything about cable, yet continue to pay an arm and a leg each month. There are a number of reasons for that: lack of competition, being downright lazy, loving sports, or being a Luddite. The horrible customer service itself has been caused by two things: companies merging and growing too quickly without spending the money necessary to scale their customer service operations, and the lack of competition ensuring things stay that way.

Enter Charter Communications, which is busy promising regulators that all of these problems will magically go away if they're only allowed to acquire Time Warner Cable and Bright House Networks in the industry's latest $60+ billion mega merger. Like beaten house pets, most loyal, older traditional cable customers aren't optimistic that things will change. But as the Consumer Reports survey suggests, with younger demographics veering toward internet video and such choices on the rise in 2015, the clock is ticking for America's love-hate relationship with the legacy pay TV industry.

from the absolutely-nothing-we-say-is-true dept

While AT&T is now a part of two lawsuits to try and overturn the FCC's new net neutrality rules, there's probably no company singularly more responsible for the rules being necessary in the first place. It was AT&T that really got the neutrality debate rolling in the States just about a decade ago, when then CEO Ed Whitacre proudly proclaimed he was going to start charging companies like Google a "troll toll" just for touching his network.

AT&T's been on the bleeding edge of exploring creative new ways to violate net neutrality for an extra buck ever since, whether that's blocking video services to drive users to pricier plans, using throttling to drive users to costlier plans, using interconnection to sock content companies with extra costs, or using zero rating to generate new revenue at the cost of a steeply tilted playing field.

Telco CEO Randal Stephenson has been making the media rounds lately proudly proclaiming that AT&T will surely be victorious in court, and the the FCC's net neutrality rules will be vacated. But AT&T lawyers are working hard to prevent regulators from including conditions on its $49 billion acquisition of DirecTV related to neutrality as well. Despite countless instances where AT&T has used usage caps to unfair advantage, AT&T's telling regulators there's no need for neutrality conditions on the merger (with a specific eye on usage caps and zero rating some services) because history shows AT&T is a saint on that front:

"The record does not support Opponents’ request that AT&T be barred from exempting any online video service from any usage-based tracking, metering, or billing in its broadband services," AT&T wrote. "Opponents offer no reason for the Commission to reverse these very recent conclusions and issue a blanket, abstract prohibition that would apply only to AT&T. Doing so would deprive AT&T customers of service offerings tailored to fit their usage and their budget. It would also distort competition by hindering AT&T’s efforts to close the gap and compete with cable’s higher-speed broadband products."

In other words, the company is claiming that merger conditions preventing it from using usage caps uncompetitively -- something it usually only does in uncompetitive markets -- will hurt competition. AT&T logic! It's also trying to argue that ten years of AT&T's clear intent to do harm on this front is a mass hallucination. AT&T already imposes usage caps on its broadband customers (150 GB for DSL users, 250 GB for U-Verse fiber to the node customers) thanks to this lack of competition. Yet hysterically AT&T insists there's no way it could possibly impose aggressive caps because customers would leave AT&T:

"AT&T wrote that its broadband data limits are high enough to "accommodate the great majority of customers." Broadband providers with caps "that significantly impinge on the ability of customers to enjoy OVD [online video distribution] products will not be able to attract new customers or even to retain existing ones," AT&T wrote."

Here's the truly entertaining bit though: as we've noted before, AT&T has no interest in retaining most of these capped DSL users anyway. It's willfully trying to drive them away with rate hikes so it can disconnect them and focus on even more expensive and heavily capped wireless LTE service. It's also worth noting that AT&T's not currently enforcing those 250 GB caps on U-Verse users, because the markets it has upgraded with better service usually see improved competition. In short, AT&T caps markets that lack competition, and doesn't in markets where there's at least a little. Yet AT&T's telling the FCC that restricting their ability to impose what are entirely arbitrary caps that have nothing to do with network congestion -- would hurt its ability to compete.

Of course as we've long noted, net neutrality is a symptom of a lack of competition, and net neutrality rules are only necessary because companies like AT&T are endlessly exploring new ways to abuse this lack of competition. However, while the FCC's neutrality rules do allow users to complain about usage caps and zero rating, they're not explicitly included in the rules, and so far the FCC's given every indication that they see caps as just "creative pricing." While there have been hints the FCC might start policing caps (and unreliable usage meters) should they start getting notably more ugly, it's pretty far from certain as the agency appears to want to steer clear of broadband price controls.

Still, AT&T's working tirelessly on multiple fronts to ensure nobody infringes on its god-given right to use usage caps to abuse uncompetitive markets suffocated by regulatory capture. That was an honor bestowed upon the company after a generation of blood, sweat, tears and millions in campaign contributions, and it will be damned if it's going to have said rights trampled by those new startup and consumer-friendly goody two shoes over at the FCC.

from the Godzilla-eats-Mothra dept

Driven by the relentless M&A lust of company chair and cable industry mainstay John Malone, Charter Communications has announced that the company will be spending $55 billion to acquire Time Warner Cable. Malone and Charter had been pursuing Time Warner Cable for two years, but found their ambitions blocked when Comcast made a better offer. With Comcast's merger attempt blocked by federal regulators, Charter got a second chance. The deal was accompanied with the usual assortment of prepared CEO statements promising that this merger will surely be the one that magically makes the cable industry suck less:

"The teams at Charter, Time Warner Cable and Bright House Networks are filled with the innovators of our industry...That spirit of innovation will live on, and it will create real benefits and great long-term value for the customers, shareholders and employees of all three companies," said Tom Rutledge, President and CEO of Charter Communications. "With our larger reach, we will be able to accelerate the deployment of faster Internet speeds, state-of-the-art video experiences, and fully–featured voice products, at highly competitive prices."

"With today's announcement, we have delivered on our commitment to maximizing shareholder value," said Robert D. Marcus, Chairman and CEO of Time Warner Cable. "This agreement recognizes the unique value of Time Warner Cable, and brings together three great companies that share a common philosophy of strong operations, great products, robust network investment and putting customers first."

Yes, putting "customers first" is surely why Time Warner Cable has the worst customer satisfaction rankings not only in telecom, but in any U.S. industry. In fact, it's exactly the cable industry's relentless love for mergers and acquisitions that has resulted in cable operators growing so quickly, they're unable to scale their customer service systems accordingly. Meanwhile, the lack of competition in many markets means there's little incentive to actually improve, and any cost savings from greater size and leverage certainly won't be passed on to consumers. Combine that with the job losses as companies eliminate redundancies, and you've generally got deals that benefit nobody outside of Wall Street.

While this deal probably won't improve much of anything for cable customers, it's generally agreed that it's not as horrendously awful as the Comcast merger -- simply because the combined company won't have quite the same programming and advertising clout as mega-Comcast would have had. Comcast itself sent a short, two-sentence statement to the media saying the deal makes "all the sense in the world" (you know it must be good if Comcast signed off on it). In fact, reports suggest FCC boss Tom Wheeler personally called the heads of Charter and Time Warner Cable to assure them their deal would likely be approved.

That said, it's still a massive deal. In addition to acquiring Time Warner Cable for $55 billion, the combined company will also be acquiring the nation's sixth-largest cable operator: Bright House Networks, for an additional $10.3 billion. The new, combined company will serve 23.9 million customers in 41 states, and become the second largest cable operator in the nation behind Comcast. Surely it's this merger that's going to prod the cable industry to offer the kind of "competitive prices," "state-of-the-art video experiences" and excellent customer service we've all been waiting for, right?

from the dynamic-duopoly-defenders dept

We've long argued that one way to help improve broadband competition is to stop letting incumbent ISPs write protectionist state telecom law. For decades now, these laws have been rushed through campaign-contribution-soaked state legislatures. With ALEC's help, these laws usually encode restrictions that prevent towns and cities from improving their own broadband infrastructure, even if nobody in the private sector wants to (aka market failure). It's the epitome of protectionist drivel; in some cases even preventing towns and cities from striking public/private partnerships to improve telecom and municipal services.

So it was refreshing (and a little bit shocking) when the FCC earlier this year woke up from a fifteen-year slumber on this issue. The agency declared it would be using its authority under Section 706 of the Telecommunications Act to pre-empt the more idiotic portions of these laws. Responding to complaints from municipal broadband operators and utilities trying to get into the broadband business, the FCC initially took aim at just two of the worst states: North Carolina and Tennessee, where companies like AT&T have been literally writing laws ensuring their duopoly power remains unchallenged indefinitely.

It's hoped the success of the FCC's work in these two states will slowly expand to the eighteen other states that have passed similar mega-ISP-friendly laws.

Not too surprisingly, politicians loyal to incumbent ISPs cried foul, and immediately started working on drumming up partisan division. It's not working: most municipal broadband networks see broad, bi-partisan community support -- and most municipal networks have been built with Conservative approval in more Conservative-leaning cities and states (whether that's Lafayette, Louisiana, or Chattanooga, Tennessee). ISP-loyal politicians like Tennessee's Martha Blackburn have expressed outrage that the FCC would dare to trample local rights -- something that is, apparently, the sole responsibility of companies like AT&T, CenturyLink, Time Warner Cable and Comcast.

The pretense behind the opposition to municipal broadband has always been that these laws are necessary to protect taxpayers from themselves, since sometimes (like any business model) municipal broadband doesn't work out. Of course some projects have worked well and others haven't, but the decision to travel this path is something that should be left up to the towns and cities themselves, not AT&T lawyers. However, North Carolina has joined Tennessee in suing the FCC over its latest push, claiming the state has been "aggrieved" by the FCC's attempt to remove state barriers to broadband expansion:

"North Carolina Attorney General Roy Cooper has filed a lawsuit in federal court against the Federal Communications Commission seeking to overturn the FCC's decision to allow the City of Wilson to expand its community broadband network service known as Greenlight. The state has been "aggrieved," according to Cooper. But a broadband group labeled the suit a "waste" of taxpayer money. Cooper stated in the suit that the FCC "unlawfully inserted itself" between the state and "political subdivisions" such as communities."

The problem is the FCC is Congressionally mandated to ensure the "timely and reasonable" deployment of broadband services, and it's pretty hard to argue you're helping that goal by letting AT&T lawyers and lobbyists write state law that does the exact opposite. It's not like this influence resides in shadow, ALEC's draft legislation sits on the outfit's website for anyone to read. The irony of using taxpayer money under the pretense of protecting taxpayer money didn't escape municipal broadband groups commenting on the case:

"Attorney General Cooper must not realize the irony of using state taxpayer dollars to ensure less money is invested in rural broadband, but we certainly do," says Christopher Mitchell with the Institute for Local Self-Reliance. "State leaders should stand up for their citizens' interests and demand good broadband for them, rather than fighting alongside paid lobbyists to take away those opportunities."

It's worth reiterating that these towns and cities wouldn't be getting into the broadband business if they were happy with the service provided by regional monopolies and duopolies. The real absurdity of it is this: municipalities, companies and consumers alike benefit immeasurably from expanded broadband in a state, regardless of how it's provided. That Tennessee and North Carolina are willing to throw all of this potential growth away just to protect the campaign cash contributions of big telecom operators speaks volumes about the quality of Tennessee and North Carolina state legislators, and the stranglehold companies like AT&T, CenturyLink and Comcast have over the state legislative process.